While new rules introduced by the city regulator were intended to result in fairer insurance premiums for loyal customers, evidence that they work is thin.
Indeed, all the information I’ve gathered suggests otherwise. For many home and auto insurance policyholders, renewal premiums are shooting through the proverbial roof — and the only way to escape them is to look around.
As I’ve reported in both Wealth & Personal Finance and Money Mail, it’s the elderly in particular who are being hit by insurers in renewals with inflation-destroying increases of 30 percent or more.
In almost all cases, the higher renewal premium is demanded even though the customer has not made any claims.
Rarely a day goes by without a reader reaching out to me, baffled by the sheer size of their renewal bounty – more Everest than Snowdon-esque. One of the most shocking innovations I’ve received recently is one from a North London homeowner. His insurer, Liverpool Victoria (LV), wanted to raise his home premium by more than 40 per cent to nearly £1,400.
Covered: For many home and auto insurance policyholders, renewal premiums are shooting through the proverbial roof
He reached out, hoping to negotiate a discount, but LV had no intention of trading. Disappointed, he shopped around and found identical cover at Aviva – 63 per cent cheaper than his 2022 LV premium and a saving of almost £770 off what LV wanted this year.
The question he asked me was to the point: “If Aviva can offer such a good deal, why can’t LV?”
It’s a tricky one and I’m not sure I have a definitive answer – aside from the fact that prices vary significantly between insurers depending on their claims experience (both nationally and locally).
Insurers are also targeting specific segments of the market with attractive pricing, while actively discouraging other demographics from whom they fear being hit with above-average claims.
In years past, all insurers were required to provide customers with information about the previous year’s premium on their renewal notice.
But it’s time insurers gave more information – especially when it comes to a significant increase in premiums. It is certainly not beyond the ability of insurers to explain in a renewal notice why a premium changes significantly. So if an increase in local crime is a trigger to increase someone’s home coverage, the policyholder should be made aware of it. Likewise, if a car owner’s age has pushed them into a higher premium class, they should be made aware of it. While this won’t stop customers from shopping around, it can help them understand why their premiums are rising — and keep them from getting outraged.
I proposed this to the regulator – the Financial Conduct Authority (FCA) – earlier this year. At the time, it seemed receptive to the idea, though perhaps it was just trying to calm me down. Still, the introduction of new FCA consumer tax rules later this year gives the regulator the perfect excuse to force insurers to be more transparent about premiums.
These rules require financial companies to send messages that customers can understand. I challenge any insurer to defend the lack of information given to customers whose premiums have skyrocketed, without rhyme or reason.
Hubs are vital as the bank clearance continues
The clearing of bank branches continues steadily. Another 81 closures were announced last week by banking combinations Lloyds and NatWest, bringing the total since February last year to 832.
This increase in closures means that Cash Access UK (funded by the banks) must now put on its skates and set up banking hubs (community banks) in communities that have remained bankless. So far, 51 have been pledged, but only four of them are operational. An unsatisfactory state of affairs. Carol Alexander lives in Welshpool, Powys, which lost its last bank when Lloyds closed in January. Although a banking hub was promised in July last year, there is no sign of it. She says footfall in local stores has plummeted now that the city is bankless.
With banks stepping up their branch closure programs the least they should be doing is giving Cash Access UK more financial room to ensure hubs are delivered quickly. Communities like Welshpool deserve nothing less.
Sometimes I don’t practice what I preach
Sometimes I don’t practice what I preach. Me culpa. My latest financial offense occurred when I recently went to withdraw money from an ATM near where I work in London.
Normally vigilant—checking the ATM for hidden cameras and making sure no one was right behind me—I simply took a call halfway through the transaction.
As a result, the £50 I asked for was nowhere to be seen when I went to get it. I panicked, thinking someone had dragged it off while I was on the phone.
After a few frantic phone calls to my bank, it soon became clear what had happened. It had taken me too long to get my money, so the machine sucked the notes back into its vaults.
A few days ago I received a note from my bank that the money had been refunded to my account.
Note to self: Don’t take calls from mom when using an ATM.
Is this Goldilocks the time for investors to enter the market?
Goldilocks moment?: Three bowls of porridge – one too hot, the other too cold, and the last one just right
Mutual fund managers are eternal optimists. When stock markets fall, they talk about buying opportunities. When they get up, they say there’s more to come.
One of the most hopeful is Christopher Rossbach, managing partner of investment manager J Stern & Co. He manages the World Stars Global Equity Fund, which invests in companies with “lasting competitive advantages” such as luxury brand company LVMH, payment processing giant Mastercard and beverage retailer Pernod Ricard.
Last October, Rossbach collated a study for The Mail on Sunday which found that if investors are willing to invest for at least a decade, they should earn annual returns that are better than any other financial asset – even if they lose short-term paper losses along the way. suffering .
His findings were based on an analysis of the performance of the MSCI World Index and the FTSE All-Share Index since 2000. So someone who invested in the MSCI World Index in the early 2000s would not have generated positive annual returns until late 2000. 2009. But if they had held out until the end of September last year, they would have averaged 6.5 percent annual returns.
“In an inflationary environment, equities are the only major, liquid and accessible asset class that can generate significant returns,” he told me. “Patience is rewarded time and time again when it comes to investing.”
A few days ago, London-based Rossbach got back in touch with an update. Despite all the doom and gloom since last October, he was happy to report that the MSCI World and FTSE All-Share had both increased in value, as had his World Stars fund.
More interestingly, as far as investors are concerned, he said a world “with solid global growth, interest rates between four and six percent and inflation below four percent was one to look forward to – not fear.”
“For investors, it’s Goldilocks again,” he said, referring to Goldilocks entering the bear house and tasting three bowls of porridge — one too hot, one too cold, and the last one just right.
According to Rossbach, now is a “perfect time” to invest – “neither too hot nor too cold.”
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